ADDRESS  ON  TAXATION, 


BY 


MR.  THOMAS  HILLS, 


Chairman  of  the  Assessors  of  Boston. 


DELIVERED  BEFORE 

o 

THE  BOSTON  EXECUTIVE  BUSINESS  ASSOCIATION, 

Revkre  House,  Jan.  20,  1890. 


BOSTON : 

ALFRED  MUDGE  &  SON,  PRINTERS, 
No.  24  Franklin  Street. 

1890. 


Boston  Executive  Business  Association, 


OKKICERS. 

PRESIDENT. 

HERSEY  B.  GOODWIN, 

Of  Chamber  of  Commerce. 

VICE-PRESIDENTS. 

JEROME  JONES,  DANIEL  G.  TYLER, 

Of  Earthen-Ware  Association.  Of  Paint  and  Oil  Club. 

secretary. 

WILLIAM  H.  SAYWARD, 

Of  Master  Builders  Association. 

TREASURER. 

LAMONT  G.  BURNHAM, 

Of  Coal  Trade  Association. 

DIRECTORS. 

S.  J.  HARRISON,  JOSEPH  R.  LEESON, 

Of  Furniture  Exchange.  Of  Merchants  Association. 


^  ^OOu-hoa 


^ZC,-  >- 

K  ■  Qc;» 


A  DDRESS. 


Gentlemen  of  the  Boston  Executive  Business  Association: 

At  your  Annual  Meeting  in  October  last,  a  committee  appointed  six 
months  previous  “  to  consider  the  question  of  taxation  for  the  city  of 
Boston,”  submitted  a  report  recommending  radical  changes  in  our  Massa¬ 
chusetts  system  of  assessment.  I  have  been  honored  by  an  invitation  to 
join  in  the  discussion  of  that  paper.  My  part  shall  be  to  review  the  report 
from  the  stand-point  of  one  who  cannot  agree  with  the  conclusions  of  the 
committee  or  the  reasoning  that  led  to  them.  The  subject  is  so  important 
and  far-reaching  that  the  most  concise  statement  will  occupy  more  time 
than  is  usually  allotted  to  one  person  on  such  an  occasion.  Though  the 
necessities  of  the  case  make  the  manner  of  dealing  with  it  hard  and  dry,  I 
shall  not  attempt  to  relieve  its  presentation  with  any  rhetorical  dress. 
To  none  other  than  a  collection  of  Boston  business  men  would  I  venture 
upon  such  a  style  of  discussion,  but  interested  as  you  must  be  in  the 
subject,  I  trust  I  shall  not  weary  you  beyond  endurance. 

And  let  me  say  in  the  beginning  that  a  majority  of  your  committee  are  of 
my  personal  friends  and  acquaintance,  and  though  they  have  not  spared  me 
in  their  report,  I  have  not  considered  their  remarks  as  personal,  but  as 
aimed  at  the  opinions  I  am  known  to  hold.  In  my  review  of  their  report  let 
no  words  of  mine  be  construed  into  an  attack  upon  the  committee,  for 
whom  I  entertain  sentiments  of  sincere  respect,  but  let  my  plain  words  be 
deemed  as  directed  only  at  the  views  they  have  adopted  as  their  own. 
And  now  without  another  word  of  preface  let  us  consider  their  report. 

Statement  of  the  Case,  and  Proposed  Remedy. 

The  foundation  of  it  appears  to  be  the  opinion  of  the  committee  that  so 
small  a  proportion  of  personal  property  is  assessed  under  our  laws,  that 
what  is  discovered,  and  with  the  real  estate  of  the  community  taxed,  is  so 
disproportionately  burdened  that  great  injustice  results.  That  so  large  a 
part  of  the  personalty  escapes,  that  what  is  found  by  the  local  assessors 
and  added  to  the  valuation  of  the  realty,  makes  an  insufficient  basis  of 
taxation,  and  all  the  money  needed  for  the  city’s  requirements  cannot  be 
obtained  by  the  rates  of  taxation  applied  to  the  whole  amount  of  assessable 
property.  Their  remedy  is  to  give  up  all  local  assessment  of  personal 
property  for  city  taxes ;  to  have  the  Commonwealth  relieve  the  city  of  all 


P  205o8 


2 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


State  and  county  assessments.  They  provide  for  the  deficit  their  scheme 
would  make  by  transferring  to  the  State  the  power  to  assess  certain  classes 
of  personal  property,  especially  that  which  passes  through  our  Probate 
Courts,  and  by  the  special  assessment  of  certain  franchises. 

The  Relative  Value  of  Real  and  Personal  Property. 

The  corner-stone  of  their  foundation  is  their  belief  that 
“  the  personal  property  of  both  city  and  State,  which,  under  the  law,  is  subject 
to  taxation,  cannot  be  less  than  twice  the  value  of  the  real  estate.” 

They  say :  — 

“  Upon  this  all  recent  writers  agree.” 

They  do  not  name  the  writers.  I  wish  they  had  done  so.  I  have  not 
met  the  statements  of  any  recent  writer  who  would  be  considered  an 
authority  upon  that  point — other  than  the  Hon.  David  A.  Wells,  who  in 
his  report  to  the  governor  of  New  York,  in  1870,  put  the  value  of  the 
personal  estate  as  equal  to  that  of  the  real.  But  the  committee  think  that 
twice  the  value  of  real  property  is  an  under-estimate  of  the  value  of  the 
personal,  for  they  indorse  the  opinion  of  “a  distinguished  professor  of 
political  economy,” 

“  that  in  such  great  financial  States  as  Massachusetts  and  New  York  it  was 
undoubtedly  true  that  the  personal  property  of  the  people  of  these  States  was  in 
value  fourfold  that  of  real  estate.” 

But 

“  to  make  the  point  strong  beyond  doubt,  a  concession  of  one  half  was  made,  and 
it  was  called  only  twice  the  value  of  real  property.” 

But  they  add  :  — 

“  Every  day,  however,  facts  and  opinions  come  to  us  which  only  strengthen  the 
original  opinion  expressed.” 

What  this  proportion  is,  is  evidently  a  matter  of  opinion,  with  no  accurate 
data  upon  which  to  make  a  determination.  We  have  as  much  right  to 
reason  on  it  as  any  one.  Let  us  spend  a  few  moments  in  its  consideration. 

Seventeen  years  ago  the  great  fire  of  Boston  swept  over  sixty-five  acres 
of  the  best  part  of  the  business  district  of  our  city.  There,  if  anywhere, 
would  have  been  found  the  largest  proportion  of  personal  property  as 
compared  to  the  real  estate  upon  which  it  was  placed.  It  was  because  the 
buildings  of  that  district  were  so  crowded  with  merchandise  that  the  fire 
was  beyond  control,  until  it  reached  a  point  where  there  were  no  ware¬ 
houses.  No  other  district  in  our  city  of  equal  area  could  have  exposed  so 
great  a  value  of  personal  property  to  a  conflagration.  It  is  generally 
conceded  that  the  total  loss  by  that  fire  was  $75,000,000.  The  assessed 
value  of  buildings  destroyed  was  in  round  numbers  $14,000,000,  and  of 
the  land  on  which  they  stood  $28,000,000,  —  a  total  real-estate  value  of 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


3 


$42,000,000.  This  leaves  $61,000,000  for  the  value  of  the  personal  property 
destroyed;  about  one  hundred  and  forty-five  per  cent  of  the  value  of  the 
real  estate.  Another  test  indicates  that  this  estimate  is  ample.  The 
insurance  placed  on  the  property  of  the  district  was  $52,076,600.  Deduct 
the  assessed  value  of  the  buildings  destroyed,  and  the  approximate  value  of 
the  personal  property  covered  is  found  to  be  about  $38,000,000,  or  about 
ninety  per  cent  of  the  real  estate.  Take  the  fire  of  sixty  days  ago  in 
Bedford  and  Chauncy  streets.  The  assessed  value  of  the  real  estate 
where  the  buildings  were  destroyed  or  badly  injured  was  $3,035,000.  Land, 
$2,116,400;  buildings,  $918,600.  The  insurance  loss  is  officially  stated  in 
to-day’s  papers,  and  for  personal  property  is  found  to  be  $2,502,707,  —  an 
amount  equal  to  eighty-two  per  cent  of  the  real  property  upon  which  it  was 
stored.  I  need  not  remind  business  men  that  insurance  is  not  an  infallible 
test  of  values.  But  we  are  now  in  the  region  of  estimate,  and  not  of 
accurate  statement.  It  is  admitted  that  it  can  be  claimed  that  this  propor¬ 
tion  is  only  approximately  correct,  for  the  reason  that  personal  property  was 
consumed  upon  which  there  was  no  insurance,  and  much  saved  that  was 
covered.  But  the  value  of  the  uninsured  personal  property  that  was 
destroyed  is  known;  it  amounted  to  $370,188.  We  have,  then,  an  ascer¬ 
tained  personal  property  loss  of  $2,872,892;  less  than  ninety-five  per  cent 
of  the  value  of  the  real  estate.  Nothing  is  left  for  estimation  but  the 
value  of  the  property  saved  upon  which  there  was  insurance.  Let  the 
other  five  and  one  half  per  cent  stand  for  this  sum,  and  in  this  most  favor¬ 
able  location  for  sustaining  the  committee’s  estimates  we  find  that  the 
destruction  of  a  score  of  warehouses  shows  that  in  the  heart  of  the 
business  district  of  our  city  the  value  of  real  and  personal  property  is  only 
about  equal. 

But  let  us  further  try  the  committee’s  estimate,  which  “every  day”  is 
strengthened,  in  their  opinion.  Boston’s  real  estate,  $600,000,000  ;  personal, 
“fourfold,”  $2,400,000,000;  total,  $3,000,000,000.  I  shall  like  to  assess 
taxes  in  Boston  upon  that  valuation.  We  could  have  all  we  desired.  There 
would  be  no  complaint  about  the  rate.  Can  you  conceive  of  the  sum  your 
committee  say  is  the  true  valuation  of  Boston?  The  amount  is  larger  than 
the  national  debt  at  the  close  of  our  Civil  War.  Try  their  figures  by  the 
population  of  the  city,  —  we  all  hope  that  the  census  of  this  year  will  find  it 
450,000,  —  call  it  that;  and  you  have  an  average  of  over  $6,600 per  capita. 
Hereafter  as  I  pass  through  the  lower  end  of  South  Boston,  oh  my  way 
from  home  to  business,  and  note  that  teeming  population,  it  seems  to  me 
I  shall  look  with  ever  increasing  respect  upon  each  ragged  urchin,  for  in 
one  sense  at  least  he  is  the  representative  of  $6,666. 

At  our  last  election  our  voters  numbered  70,344,  —  not  those  who  voted 
only,  but  those  on  the  lists.  Let  us  hope  they  voted  wisely.  Had  they 
known  that  the  ballot  of  each  citizen  affected  the  destinies  of  a  city  where 
the  property  to  be  protected  was  an  average  of  over  $34,000  to  each  voter 


4 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


it  is  probable  they  would  have  exercised  the  right  of  a  freeman  under  a 
sense  of  responsibility  they  never  felt  before. 

In  discussing  the  income  tax  the  committee  find  a  possible  assessment  in 
forty  years  of  $100,000,  and  ask, 

“  What  proportion  of  the  business  men  about  us  can  show  as  much  money  as  this 
as  the  net  gain  of  as  many  years  of  toilsome  business?  ” 

If  the  retired  business  men  have  but  moderate  competencies,  and  the 
common  people  have  less,  where  is  this  immense  sum  that  the  committee 
thinks  exists,  and  who  hold  it? 

But  I  close  this  branch  of  my  review  with  something  a  little  better  than 
estimates.  Your  committee  state  that  the  amount  of  property  which  “  passed 
through  the  Probate  Court  of  Suffolk  last  year  was  not  far  from  $25,000,000.” 

They  are  doubtless  right  in  this  estimate.  I  know  the  source  of  their 
information.  It  could  not  be  better.  I  thought  that  here  was  an  oppor¬ 
tunity,  following  in  their  footsteps,  to  get  some  definite  figures  that  would 
go  far  to  determine  this  vexed  question.  For  though  the  inventories  of 
many  estates  are  never  filed,  yet  any  considerable  number  being  entered,  it 
is  reasonable  to  suppose  that  the  proportions  of  real  and  personal  would  be 
substantially  the  same  in  all  estates  as  was  found  to  exist  in  any  number 
large  enough  to  represent  a  fair  average  of  the  property  of  the  community. 

The  investigation  involved  no  little  labor;  for  while  the  docket  indexes 
showed  the  amount  of  both  classes  of  property,  yet  the  true  value  of  the 
really  could  only  be  obtained  by  an  inspection  of  the  inventory,  as  in  many 
cases  only  the  value  of  the  equity  of  a  mortgaged  estate  would  be  shown 
upon  the  face  of  the  return. 

In  the  year  which  ended  on  the  ist  of  May  last,  nine  hundred  and  twenty- 
five  inventories  were  filed,  and  their  analysis  would,  I  think,  have  been  gen¬ 
erally  accepted,  but  in  the  volumes  that  were  accessible  only  three  hundred 
and  forty-four  had  been  entered.  That  number  returned  $4,131,255  real,  and 
$5,759,753  personal  estate.  The  real  estate  was  subject  to  a  certain  amount 
of  mortgage,  but  for  fear  that  I  shall  open  the  discussion  as  to  their  status 
as  debts  or  property,  I  accept  the  figures  as  they  stand,  and  find  that  of 
$9,891,000  of  property  represented,  forty-two  per  cent  was  real  and  fifty- 
eight  per  cent  personal  estate.  We  will  not  pursue  this  branch  of  the  report 
further.  It  may  be  that  the  committee  have  this  day,  as  “  every  day,” 
received  “facts  and  opinions  ”  “  which  strengthen  the  opinion”  expressed, 
that  the  value  of  the  personal  is  “  fourfold  ”  that  of  the  real  estate  —  that 
outweigh  the  considerations  that  have  been  presented. 

The  Claim  that  the  Massachusetts  System  is  Unjust  and  Illegal. 

But  starting  from  their  premises,  the  committee  assert  that, 

“  We  all  know,  because  it  cannot  help  being  known  of  all  men,  that  ‘  taxation  in 
thj  city  of  Boston  and  State  of  Massachusetts,’  so  far  as  personal  property  is  con- 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


5 


cerned,  is  the  greatest  piece  of  injustice  and  inequality  that  could  be  well  conceived 
of.” 


If  your  committee  were  denouncing  an  autocratic  and  centralized  govern¬ 
ment  for  the  injustice  its  members  conceive  it  is  inflicting  upon  the  people, 
we  could  give  them  credit  for  the  sincerity  of  their  convictions  if  we  did  not 
agree  with  their  views.  But  what  shall  be  said  for  their  position  when  we 
reflect  that  this  is  a  government  of,  by,  and  for  the  people  ?  If  the  committee 
are  right,  the  people  of  this  Commonwealth  have  foolishly  oppressed  them¬ 
selves  for  the  past  two  and  one  half  centuries,  or  have  been  too  ignorant  to 
know  what  was  needed  for  their  own  prosperity. 

We  have  the  admission  of  the  committee  that  our  present  system  is  not 
ruinous,  for  although  they  say  that  each  year  produces  “  more  and  more  of 
its  evil  fruits,”  yet  they  are  apparent  only  “  with  every  year  of  the  growth 
and  prosperity  of  the  city  and  State.”  But  your  committee  charge  that 
taxation  in  Boston  and  Massachusetts  is 

“  in  violation  of  that  constitutional  declaration,  that]  it  shall  be  proportionate  and 
reasonable,  as  well  as  of  that  statutory  law  which  requires  that  it  shall  be  according 
to  the  ability  of  citizens.” 

It  is  a  sufficient  answer  to  this  position  to  say  that  if  such  is  the  case  a 
court  that  has  enjoyed  the  confidence  of  all  good  citizens  from  its  establish¬ 
ment  can  promptly  right  the  wrong.  There  is  no  need  for  argument  here  or 
in  legislative  halls  ;  the  mandate  of  the  judge  that  relieves  one  citizen  from 
illegal  assessment  will  settle  the  law  for  all.  But  just  what  do  the  commit¬ 
tee  mean  when  they  say  that  our  taxation  is  in  “  violation  ”  “  of  that  statu¬ 
tory  law  which  requires  that  it  shall  be  according  to  the  ability  of  citizens  ”  } 
That  our  laws  are  based  on  the  idea  that  each  shall  contribute  to  the  public 
needs,  according  to  his  ability,  I  and  those  who  think  with  me  will  claim, 
and  your  committee  and  those  who  hold  similar  views  will  deny.  But  both 
sides  must  admit  that  there  is  no  statutory  law  in  which  that  idea  is  specifi¬ 
cally  expressed.  The  law  says  that  all  property  shall  be  taxed,  and  it  is  the 
complaint  of  the  committee  that  such  is  its  requirement.  Their  position  is 
equivalent  to  saying  that  the  execution  of  the  law  is  its  violation.  Their 
expression,  that  the  taxes  in  our  city  are  assessed  and  collected  without 

“  decent  regard  for  the  safeguards  and  assurances  of  the  Constitution  and  laws  of 
the  good  old  Commonwealth  in  which  we  live,” 

is  entirely  gratuitous  and  unwarranted. 

The  Relative  Amounts  of  Property  in  New  York,  Pennsylvania, 
AND  Massachusetts. 

The  absence  of  reliable  statistics  in  your  committee’s  report  or  that  are 
easily  attainable  elsewhere,  upon  which  to  base  an  opinion  as  to  the  relative 
amounts  of  personal  property  in  New  York,  Pennsylvania,  and  Massachu- 


6 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


setts,  leads  me  to  pass  that  part  of  the  report  without  comment.  I  am  not 
entirely  ignorant  of  the  laws  and  methods  relating  to  assessments  in  our 
sister  States  ;  but  can  occupy  the  time  allowed  me  to  better  purpose  than  to 
give  opinions  based  on  such  information  as  is  available.  But  not  to  pass 
unnoticed  the  important  comparison  called  to  your  notice,  I  have  asked 
one  of  my  associates  of  this  evening  to  speak  to  that  point. 

Evasion  of  Taxation. 

“  It  would  be  easy,”  say  your  committee,  “  ...  to  bring  .  .  .  facts  within  their 
own  knowledge  in  our  own  State  showing  how  immense  estates  in  personal  property 
have,  and  do,  escape  that  share  of  the  public  burdens  which  by  law  rest  upon  them.” 

I  am  happy  in  this  connection  to  note  that  they  do  not  intimate  that  the 
assessors  of  Boston  have  been  parties  to  these  evasions  of  assessment, 
further  than  to  say  they  have  been  informed 

“  that  even  the  eminent  chairman  of  the  Boston  Board  has  been,  we  will  not  say 
unwisely  or  unjustly,  compelled  to  do  a  pretty  considerable  amount  of  hard  winking 
at  facts,  that  Boston  need  not  always  get  worsted  in  the  encounter  !  ” 

I  think  I  have  a  right  to  speak  for  that  gentleman,  and  while  he  has  not 
knowingly  been  blind  to  what  it  was  his  duty  to  see,  or  attempted  by  hard 
winking  to  be  oblivious  to  disagreeable  duties,  yet  while  it  is  the  policy  of 
the  law,  that  even  the  criminal  on  trial  shall  have  the  benefit  of  every  rea¬ 
sonable  doubt,  he  will  exercise  that  discretion  which  the  law  intrusts  to 
him,  in  estimating  the  unseen.  He  accepts  the  qualified  compliment  of  the 
committee  that  in  so  doing  he  has  acted  not  “  unwisely  or  unjustly,”  as  being 
not  wholly  unmerited.  But  the  evasion  which  they  are  sure  exists,  your 
committee  are  unwilling  to  denounce,  and  apologize  for  it,  and  say  that  when 
they,  or  you,  their  fellow-members,  become  millionnaires,  you  all  will  “  do 
as  most  other  millionnaires  do  or  have  done,”  and  that  the  blame  for  it  will 
not  be  yours,  but  that  the  “  system  ”  of  taxation  will  be  responsible  for  it,  “  and 
for  that  the  people  of  the  State  are  responsible.”  They  add,  however  :  — 

“  Your  committee,  however,  are  not  unmindful  of  that  view  of  the  case  expressed 
in  the  following  language.  W e  quote  from  the  chairman  of  the  Boston  Board  of 
Assessors :  — 

“  ‘  That  personal  property  in  Massachusetts  declared  by  her  laws  to  be  subject  to 
taxation  does  in  some  degree  escape  assessment  it  is  impossible  to  deny.  The  most 
vigilant  of  assessors  cannot  find  it  all,  and  there  are  not  wanting  those  in  every  com¬ 
munity  willing  to  invoke  the  name  of  the  Creator  to  the  truth  of  a  statement  which 
is  a  falsehood  and  a  fraud.’  ” 

Before  commenting  on  this  statement,  it  is  proper  to  say  that  your  com¬ 
mittee  were  not  justified  in  giving  me  credit  for  the  quotation.  They  found 
it  in  the  report  of  the  Commission  on  Taxation  of  1875.  Associated  with  me 
as  members  of  that  body  were  President  Seelye,  of  Amherst  College,  and 
Judge  Barker,  of  the  Superior  Court ;  gentlemen  of  acknowledged  ability. 


ADDRESS  ON  TAXATION,  BY  MR,  THOMAS  HILLS. 


7 


above  the  suspicion  that  they  would  accept  as  their  own,  statements  or 
opinions  which  they  did  not  believe  to  be  true.  Your  committee  charac¬ 
terize  the  quotation  from  the  report  as  a  forcible  statement,  and  ask :  — 

“  Is  there  truth  and  justice  enough  in  it  to  have  any  considerable  weight  in  this 
discussion?  We  unhesitatingly  say  no,  and  unqualifiedly  condemn  both  the  spirit 
and  method  of  treating  the  subject.  We  doubt  if  there  is  a  millionnaire  in  the  Com¬ 
monwealth  who  would  for  a  moment  entertain  the  thought  of  making  such  a  solemn 
false  statement.” 

A  committee  who  think  that  if  they  reach  the  “  dangerous  condition  ”  of 
millionnaires  they  would  be  “  quite  likely  to  do  as  most  other  millionnaires 
do,”  have  certainly  a  right  to  an  opinion  as  to  what  one  of  that  class  would 
do  under  any  circumstances. 

But  1  think  that  even  the  committee  will  admit  that  they  have  limited 
opportunities  for  judging  what  a  millionnaire  would  do,  who  was  in  the  “  dan¬ 
gerous  condition  ”  of  being  called  on  to  contribute  twelve  or  fifteen  thousand 
dollars  annually  to  the  public  treasury.  Perhaps  they  may  be  willing  to 
admit  that  an  assessor  who  represented  the  government  that  demanded  the 
contribution  and  met  the  unwilling  contributor,  would  have  better  opportuni¬ 
ties  to  judge,  than  one  who  was  a  stranger  to  the  transaction.  Just  how 
much  “truth  and  justice”  your  committee  would  require  in  a  statement 
before  they  would  consent  that  it  should  “  have  any  considerable  weight 
in  this  discussion,”  there  is,  I  presume,  no  means  of  determining. 

But,  as  a  representative  of  the  tax  department  of  the  city  of  which  we  all 
are  tax-payers,  I  assert  that,  had  they  the  same  experience  that  has  fallen  to 
my  lot,  they  never  would  have  penned  the  quotation  I  have  taken  from  their 
report. 

I  am  not  a  believer  in  the  total  depravity  of  millionnaires.  I  have  found 
so  large  a  number  of  noble,  public-spirited  men  among  our  heavy  tax-payers, 
that  I  am  willing  to  say  that,  in  my  opinion,  the  retired  capitalists  of  Boston 
will  compare  favorably  with  the  business  men  of  our  city,  in  meeting  their 
obligations  to  the  public  as  measured  by  our  tax  laws.  But  he  must  be  a 
blind  observer  of  human  nature  who  expects  to  find  with  increase  of  wealth, 
a  decrease  of  the  desire  to  avoid  assessment.  A  statement  of  the  worst 
case  that  has  come  under  my  observation  will,  I  think,  satisfy  the  most 
incredulous  that  the  statement  your  committee  “unqualifiedly  condemn” 
was  warranted  by  existing  facts,  and  that  the  actors  in  it  were  but  types  of 
classes  that  are  with  us,  and  will  remain  with  us.  Consideration  for  those 
still  living  among  us,  nearly  related  to  the  millionnaire  assessed,  forbids  my 
giving  names  or  dates,  or  even  putting  to  paper  the  story  of  the  case. 


Perhaps  in  this  connection,  and  before  we  forget  that  your  committee 
have  expressed  the  opinion  that  there  is  not  “a  milljonnaire  in  the  Common¬ 
wealth  who  would  for  a  moment  entertain  the  thought  of  making  such  a 


8 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


solemn  false  statement  ”  as  filing  with  an  assessor,  under  oath,  a  fraudulent 
list  of  his  property,  it  might  be  profitable  to  recall  a  case  that  can  be  named, 
because  some  ten  years  since  the  particulars  of  the  transaction  were  given 
to  the  world  by  the  public  press.  About  that  time  the  elder  Mr.  Vanderbilt 
appeared  at  the  assessment  office  of  the  city  of  which  he  was  one  of  the 
wealthiest,  if  not  the  wealthiest  inhabitant,  and  swore  off  every  dollar  of 
his  personal  assessment,  upon  the  ground  that  “his  just  debts  and  liabili¬ 
ties  exceeded  the  amount  of  his  personal  property.”  Perhaps  it  is  the 
superior  virtue  of  Massachusetts  millionnaires,  not  one  of  whom,  in  the 
opinion  of  your  committee,  “  would  for  a  moment  entertain  the  thought  of 
making  such  a  solemn  false  statement,”  that  enabled  your  committee  to  find 
that  in  our  State  one  fourth  of  the  assessed  aggregates  were  of  personal 
property,  while  in  wicked  New  York  the  proportion  sunk  to  one  tenth.  To 
my  mind,  the  more  reasonable  explanation  is,  that  Massachusetts  has  a 
better  assessment  law,  and  that  it  is  better  enforced  ;  and  that  here  real 
estate  and  business  are  relieved  to  the  extent  that  wealth  in  the  hands  of 
the  capitalist  class  is  compelled  to  contribute.  But  whether  it  is  our  supe¬ 
rior  virtue  or  the  greater  intelligence  of  our  law-makers  that  produces  the 
difference,  it  is  clear  that  one  millionnaire,  at  least,  was  not  only  capable  of 
thinking  of  making  “a  solemn  false  statement,”  but  of  actually  making  it, 
for  within  a  few  weeks  of  the  time  when  he  took  that  oath,  he  purchased 
$40,000,000  of  United  States  four  per  cents  without  an  entry  being  made  in 
the  Registry  of  Deeds,  to  show  that  he  had  sold  any  real  estate  with  which 
to  make  the  purchase. 

The  statement  of  these  cases  is  made  with  regret,  and  I  gladly  went  out¬ 
side  the  State  for  one  illustration.  You  must  take  my  word  for  it  —  they  do 
not  stand  alone  in  my  memory.  But  with  what  we  know  of  human  nature, 
your  committee  must  not  discredit  our  intelligence  to  the  extent  of  asking 
us  to  accept  without  qualification  their  statement  that  “  the  assumption  that 
men  perjured  themselves  to  escape  taxation  ...  is  too  monstrous  in  its 
folly  to  be  entertained.” 

But  your  committee  also  “unqualifiedly  condemn  ”  a  statement  of  the  Tax 
Commission  to  the  effect  that 

“  There  are  not  wanting  officers  who  shut  their  eyes  to  the  facts  they  have  sworn 
to  observe  in  the  supposed  interest  of  the  locality  of  which  they  are  residents,  and 
help  the  possessors  of  wealth  to  act  the  lie  they  dare  not  utter.”  Your  committee 
think  “this  reflection  upon  assessors  ...  is  as  unbecoming  as  unwise.” 

The  committee  may  be  right.  What  is  unbecoming  or  unwise  is  a  matter 
of  opinion.  But  they  do  not  venture  to  say  that  they  think  it  untrue.  In 
fact,  they  admit  its  truth.  Before  leaving  the  discussion  of  this  branch  of 
their  subject,  they  say  :  — 

“  All  the  efforts  of  the  Board  of  Assessors  of  Boston,  or  any  other  city,  will  not 
avail  to  influence  the  selectmen  in  the  towns  of  the  State  from  taking  care,  in  their 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


9 


oivn  way,  of  the  interests  of  these  localities  which  so  often  prove  to  many  a  city  of 
refuge  from  a  burden  of  taxation  which  could  not  otherwise  be  endured.  In  this 
connection  is  it  not  worthy  of  remark,  that  the  retired  man  of  business,  compelled  to 
live  on  the  very  moderate  income  which  at  the  present  time  safe  investments  realize, 
must  go  where  he  will  not  be  compelled  to  divide  the  same  with  the  assessors  in  such 
unjust  and  unreasonable  proportions  as  we  witness  in  the  taxation  of  small  trust 
estates?  ” 

Comment  on  this  part  of  the  report  is  needless.  We  do  not  have  to  read 
between  the  lines  to  see  the  assessor,  sworn  to  observe  the  laws,  violating 
his  oath  of  office  ;  and  the  bargain  to  be  taxed  on  a  “limited  amount,”  made 
a  criminal  offence  by  our  statutes,  not  only  admitted,  but  the  parties  to  it 
referred  to,  the  one  as  offering,  the  other  as  fleeing  to  “  a  city  of  refuge  ”  ; 
and  the  unequal  assessment  of  every  property-holder  in  the  community  of 
which  the  tax-dodger  has  made  himself  a  part,  resulting  from  this  corrupt 
bargain,  is  commended  as  something  just  and  reasonable. 

The  Incidence  of  Taxation  of  Real  Estate  and  the  Plan  of 

THE  Committee. 

I  must  pass  without  notice  the  views  of  certain  political  economists  in 
whose  school  your  committee  have  evidently  been  studying,  if  I  am  to  have 
time  to  deal  with  the  view  which  the  committee  have  adopted.  But  in  quot¬ 
ing  Judge  Cooley  and  others  with  approval,  your  committee  say,  that  the 
argument  that  the  burden  of  taxation  thrown  upon  real  estate  by  the  exemp¬ 
tion  of  personal  property  from  assessment 

will  not  in  the  end  come  out  of  the  real-estate  owner  is  too  familiar  to  be  repeated. 
It  is  well  understood  and  filly  accepted  by  all  who  have  a  large  grasp  of  the  whole 
subject,  and  by  none  more  so  than  large  real-estate  owners  in  Boston  and  other  centres 
of  population.” 

Will  the  committee  tell  us,  then,  when  they  would  raise  the  tax  limit  from 
nine  to  twelve  dollars  for  city  purposes,  and  give  Mayor  Hart  “that  other 
million  which  he  thinks  .  .  .  the  city  should  have,”  if  there  is  to  be  no  tax 
upon  personal  property,  and  “  in  the  end  ”  the  tax  is  not  to  “  come  out  of  the 
real-estate  owner,”  where  the  money  is  to  come  from  ?  Who  is  to  pay  it  “in 
the  end”?  And  when  this  tremendous  burden  is  put  upon  the  users  and 
occupiers  of  real  estate,  as  they  think  it  will  be,  what  is  to  be  the  compensa¬ 
tion  of  that  part  of  the  community  outside  our  great  cities,  upon  whom  a 
burden  has  been  laid,  and  no  corresponding  burden  lifted?  The  reward  for 
carrying  a  doubled  tax  on  rural  real  estate  is  thus  outlined  by  the  committee. 
They  say  :  — 

“  Indeed,  we  think  many  in  the  country  even  are  beginning  to  find  out  that  to 
multiply  through  all  the  Commonwealth  such  centres  of  wealth,  beauty,  and  an 
attractive  and  money-spending  people  as  are  to  be  found  in  Lenox  and  Lancaster  and 
Williamstown,  and  many  other  interior  and  sea-shore  towns,  it  would  only  be  neces- 


10 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


sary  to  relieve  such  persons  from  liability  to  be  taxed  upon  their  personal  estate, 
when  they  would  freely  invest  in  real  property,  and  make  these  country  residences 
their  abiding-places  and  real  homesP 

To  this  beautiful  pastoral,  why  could  not  the  committee  have  added 
,,the  last  touches,  and  have  given  us  a  happy  and  contented  peasantry,  bask¬ 
ing  in  the  smiles  of  those  who  “  tQil  not,  neither  do  they  spin,”  and  so  have 
given  us  an  entirely  finished  picture  of  the  European  civilization  ? 

But  your  committee  were  too  intelligent  not  to  see  that  when  they  threw 
overboard  personal  property  locally  assessed,  they  must  trim  ballast,  or  give 
up  the  hope  of  bringing  their  ship  into  port. 

They  applied  their  remedy  where  they  thought  it  would  do  the  most  good, 
or  where  possibly  they  deemed  there  was  the  most  danger. 

Their  scheme  is,  for  the  purposes  of  taxation,  to  reduce  small  estates 
($3,000  and  under)  thirty-three  per  cent,  an  aggregate  of  $30,000,000  under¬ 
valuation,  and  increase  the  assessment  of  our  four  business  wards  (6,  7,  10, 
and  12)  ten  per  cent,  an  aggregate  of  $22,000,000  of  over-valuation. 

Waiving  the  discussion  as  to  who  pays  the  tax  of  this  business  property  “  in 
the  end,”  and  how  much  of  it  would  sift  down  to  the  occupiers  of  the  small 
estates,  and  those  “  used  for  agricultural  purposes,”  which  are  also  included 
by  the  kind  consideration  of  the  committee,  there  is  this  to  be  said  to  their 
proposition.  Whatever  may  be  the  form  of  the  organic  law  of  Pennsylvania, 
which  permits  the  city  of  Philadelphia  to  tax  its  city  wards  at  full  rate,  its 
suburbs  at  three  fourths,  and  its  farm  land  at  one  half  of  the  city  rate,  that 
of  Massachusetts  is  not  so  elastic.  In  a  case  decided  in  1875,  where  one 
class  of  real  estate,  reservoirs  of  water  for  mill  power,  assessable  by  a  special 
law  on  a  scale  different  from  other  real  estate,  our  Supreme  Court  found  the 
act  unconstitutional.  In  their  decision,  the  Court  say  that  the  provision  of 
the  Constitution  that  “  requires  that  all  taxes  levied  under  its  authority  be 
proportional  and  reasonable,  forbids  their  imposition  upon  one  class  of  per¬ 
sons  or  property  at  a  different  rate  from  that  which  is  applied  to  other 
classes  ;  whether  that  discrimination  is  effected  directly  in  the  assessment, 
or  indirectly  through  arbitrary  and  unequal  methods  of  valuation.”  (118 
Mass.  386.) 

It  will  hardly  be  profitable  to  further  consider  the  proposition  of  the  com¬ 
mittee,  or  their  suggestion  that  “  a  reasonable  amount  of  common-sense  on 
the  part  of  the  assessors  in  Boston”  would  “nearly  meet  all  the  difficulties, 
antagonisms,  and  hardships  of  the  change.” 

Collateral  and  Succession  Taxes. 

It  is  a  pleasure  to  agree  with  your  committee  as  to  the  expediency  of  a 
collateral  inheritance  and  succession  tax.  I  can  hardly  do  otherwise,  as  the 
commission  of  which  I  was  a  member,  and  to  which  I  have  already  referred, 
suggested  it  to  the  Legislature  fifteen  years  ago. 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


The  Income  Tax. 

Much  of  the  space  of  your  committee’s  report  is  used  in  denouncing  the 
assessment  of  the  income  above  $2,000  of  a  “  profession,  trade,  or  employ¬ 
ment,”  which,  under  its  old-time  name  of  the  “  faculty  tax,”  has  been  a  part  of 
the  assessment  law  of  Massachusetts  from  the  earliest  colonial  times.  An  ' 
extract  from  the  law  of  1646  will  show  that  an  income  tax  upon  business 
men  has  been  in  force  in  this  State  for  more  than  two  centuries :  — 

“  And  for  all  such  persons  as,  by  the  advantage  of  their  arts  and  trades,  are  more 
enabled  to  help  bear  the  public  charges  than  common  laborers  and  workmen,  as 
butchers,  bakers,  brewers,  victuallers,  smiths,  carpenters,  tailors,  shoemakers,  joiners, 
barbers,  millers,  and  masons,  with  other  manual  persons  and  artists,  such  are  to  be 
rated  for  returns  and  gains,  proportionable  unto  other  men,  for  the  produce  of  their 
estates,” 

The  discussion  of  the  justice  or  expediency  of  an  income  tax  would  take 
more  time  than  can  now  be  spared.  But  we  can  say,  in  passing,  that  John 
Stuart  Mill  and  other  able  political  economists  advocate  such  a  tax,  and  even 
your  committee  are  willing  to  compromise  with  their  principles  and  have  an 
income  tax  laid  on  the  invested  capitalist,  if  only  he  can  be  relieved  of  the 
tax  of  fourteen  dollars  on  the  value  of  his  one-thousand-dollar  bond,  and  pay 
an  assessment  of  two  dollars  and  a  half  from  its  income. 

But  they  have  no  suggestion  of  compromise  for  the  income  tax  upon  the 
business  man,  and  demand  its  repeal,  although  they  say  that  “  it  does  not 
amount  to  much  in  its  result.”  They  “  repudiate  ”  the  “  concession  ”  of  the 
assessors  of  Boston,  as  evidenced  by  the  most  liberal  construction  of  which 
the  law  will  admit,  and  word  their  argument  for  repeal  in  such  a  manner  as 
to  leave  the  inference  that  a  tax  that  is  older  than  the  Constitution  is  itself 
unconstitutional.  If  they  are  right,  it  follows  that  the  founders  of  our  Com¬ 
monwealth  submitted  to  assessments  that  could  not  be  justified  by  the 
organic  law  of  which  they  were  the  authors. 

But  bolder  than  inference,  they  talk  about  the  imposition  of  the  tax  upon 
those  whose  stocks  of  merchandise  have  been  assessed,  and  declare  that 
the  action  of  the  assessors  is 

“  in  direct  violation  of  that  provision  of  the  laws  ‘  that  no  income  shall  be  taxed 
which  is  derived  from  property  subject  to  taxation.’  ” 

Before  charging  officers  sworn  to  execute  the  law  with  direct  violation  of 
its  provisions,  and  suggesting  that  they  observe  “  more  conscientiousness  in 
this  regard,”  would  it  not  have  been  well  for  some  member  of  the  commit¬ 
tee  to  have  ascertained  from  the  department  at  City  Hall  if  there  were  not 
some  justification  for  the  construction  they  so  hotly  condemn Had  they 
done  so,  they  would  have  been  informed  that  the  restraining  language  on 
which  they  rely  was  enacted  forty  years  ago,  and  that  twenty  years  ago  the 
precise  point  upon  which  they  base  their  argument  was  before  our  Supreme 


12 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


Judicial  Court,  and  was,  by  the  full  bench  of  judges,  decided  against  the 
view  of  the  law  of  which  they  are  so  certain.  In  the  opinion,  the  Court 
begins  with  the  statement  that  “the  assumption  on  which  the  petitioner’s 
case  depends  is  a  fallacy,”  and  the  case  ends  with  the  opinion  that  “  we  can 
not  doubt  that  this  tax  is  allowed  and  justified  by  the  laws  of  the  State.” 

The  case,  which  is  that  of  Wilcox  v.  Middlesex  (103  Mass.  544),  is  com¬ 
mended  to  the  study  of  the  committee.  It  might  follow  that  they  would 
derive  some  information  from  the  reasoning  of  the  learned  judge  who  wrote 
ihe  opinion  for  the  Court. 

The  Single  Tax.  ^ 

The  next  subdivision  of  the  report  is  on  the  single-tax  theory  of  Henry 
George.  It  is  a  satisfaction  to  agree  with  what  seems  to  be  the  conclusion 
of  your  committee,  or  with  any  one  who  can  give  good  reasons  that  will 
help  the  people  to  see  through  this  wild  scheme. 

With  its  first  appearance,  I  tested  it  by  our  valuations,  and  found  that  the 
whole  yearly  ground  rent  of  the  improved  land  of  Boston  would  not  meet 
the  annual  tax  requirement.  It  goes  without  saying,  that  if  such  would  be 
the  result  in  our  city,  the  scheme  of  the  single  tax  would  not  work  elsewhere. 

In  the  early  part  of  their  argument,  the  committee  say  that 
“  the  attempt  to  divorce  land  from  the  buildings  or  improvements  thereon  seems  to 
us  so  unreasonable  and  unnatural,  and  to  work  such  injustice,  that  it  cannot  be 
entertained  by  your  committee,  nor  will  it  be  sanctioned  by  the  people  of  the 
Commonwealth.” 

This  seems  well  enough.  But  near  the  close  of  the  discussion  of  this 
branch  of  their  subject,  your  committee  observe  that  they 
“  are  free  to  say  that  they  can  imagine  a  single  tax  upon  land  made  in  so  fair,  just, 
and  reasonable  a  way  as  that  some  of  the  wise  ends  its  friends  seek  to  accomplish 
and  some  of  those  which  more  conservative  tax  reformers  are  striving  after,  might’ 
alike  be  attained.”  , 

How  to  make  the  first  and  last  part  of  their  argument  agree,  upon  any 
other  theory  than  that  the  conclusion  is  a  bid  for  the  assistance  of  the 
single-tax  reformers,  to  help  them  carry  their  half-way  scheme,  is  beyond 
my  comprehension.  I  must  leave  the  problem  with  the  committee.  And 
with  their  explanation  will  they  kindly  tell  us  if  “  every  day  .  .  .  facts  and 
opinions  come  to  ”  them  “  which  only  strengthen  the  original  opinion 
expressed”  by  the  “distinguished  professor  of  political  economy,”  so 
that  they  are  compelled  to  believe  that  the  personal  property  of  our  city  is 
^‘fourfold”  that  of  its  real  estate,  and  the  wealth  of  Boston  is  $600,000,000 
real  and  $2,400,000,000  personal  estate,  where,  in  principle,  is  the  Henry 
George  scheme  more  unjust  than  their  own  ?  They  would  give  up  the  attempt 
to  make  eighty  per  cent  of  the  property  of  the  community  contribute  to  the 
public  charges,  and  would  lay  the  burden  on  the  twenty  per  cent  they 
would  hold  for  taxation;  and  yet  complain  of  the  “injustice”  of  those  who 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


3 


move  forward  but  one  more  step  in  the  path  of  reform,  and  lay  the  assess¬ 
ment  on  ten  per  cent  of  existing  property. 

Taxation  as  applied  to  Boston. 

But  passing  this  topic,  we  come  to  the  last  subdivision  of  the  report : 
Taxation  in  the  City  of  Boston.  And  I  find  that  under  this  head  they 
discuss,  and  come  to  conclusions  upon,  city  expenditures  with  special 
reference  to  some  of  the  largest  items,  as  paving,  etc.;  the  borrowing  of 
money,  and  the  debt  limit ;  the  yearly  rate  of  taxation  ;  the  franchises  of 
certain  monopolies,  notably  our  gas,  electric  light,  and  street  railway 
companies ;  the  desirability  of  this  last-named  class  of  business  being 
conducted  by  municipalities;  the  ways  and  means  of  the  city,  including  the 
taxation  of  corporations  by  the  State  for  the  city’s  account;  and  liquor 
licenses ;  and  finally,  political  jobbers  and  robbers,  and  the  exemption  of 
mortgages  from  taxation.  I  note  the  force  of  their  arguments,  and  concur 
in  many  of  their  conclusions ;  but  the  scope  of  the  review  I  have  marked 
out  will  not  allow  me  to  touch  any  subject  not  directly  connected  with  that 
annual  deficiency  that  must  be  met  by  direct  taxation. 

The  Taxation  of  the  Business  of  Corporations. 

And  first,  a  few  words  on  the  position  of  the  committee  as  to  the  State 
tax  on  corporations.  That  the  committee  propose  that  the  business  men  of 
Boston,  who  are  carrying  on  their  business  under  the  charter  of  the  State, 
shall  be  taxed  on  the  personal  property  employed  therein  is  manifest,  from 
their  estimate  of  ways  and  means  under  their  twelfth  conclusion. 

In  their  “income  from  general  sources”  of  $2,400,000,  the  State  corpora¬ 
tion  tax,  which  last  year  yielded  to  Boston’s  treasury  $820,564,  is  included ; 
and  this  is  their  justification,  in  their  own  words  :  — 

“  It  may  be  proper  to  say  that  to  some  it  will  perhaps  seem  unjust  to  relieve 
capital  in  business  from  taxation,  while  the  surplus,  as  working  capital  in  manufactur¬ 
ing  corporations,  will  still  be  taxed  by  the  State,  and  Boston  get  her  substantial  share. 
It  must  not  be  forgotten,  however,  that  all  corporations  are  creatures  of  the  State; 
that  the  man  who  thus  employs  his  capital  faces  only  a  limited  liability;  that  it  is 
becoming  more  and  more  the  method  of  business  men  in  doing  a  general  mercantile 
business,  because  of  the  limited  liability;  that  all  the  States  avail  themselves  of  this 
resource.” 

Your  committee  would  destroy  a  system  of  taxation  older  than  the 
Commonwealth  because  of  the  impossibility  of  reaching  all  personal  prop¬ 
erty;  and  so  great  is  the  enormity  of  that  system,  by  reason  of  this  impossi¬ 
bility,  that  they  are  moved  to  declare,  that 

“  when  you  think  of  the  burden  of  taxation  as  being  laid,  so  far  as  personal  prop¬ 
erty  is  concerned,  on,  it  may  be,  one  fifth  or  one  tenth  part  of  that  property,  it  is 
immaterial  which,  does  not  the  injustice  of  this  thing  loom  up  so  that  it  overshadows 
all  others? ” 


14 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


And  yet  they  come  forward  with  a  proposition,  as  a  part  of  their  scheme,  not 
only  to  exact  full  taxes  of  our  manufacturing  companies,  but  of  six  mer¬ 
chants  doing  business  in  Boston,  three  are  to  be  exempt,  and  three  are  to 
be  taxed  upon  all  their  capital  invested  in  personal  property.  The  one  man 
alone  in  business,  the  two  constituting  a  firm  are  to  be  exempt ;  the  remain¬ 
ing  three,  having  organized  themselves  into  a  corporation,  under  the  four¬ 
teenth  section  of  Chapter  io6  of  the  Public  Statutes,  are  to  be  taxed,  because 
“  all  corporations  are  creatures  of  the  State,”  and  persons  “  doing  a  general 
mercantile  business,”  under  corporate  forms,  face  “only  a  limited  liability.” 
Probably  your  committee  found,  as  most  reformers  do,  that  it  is  easier  to 
tear  down  than  to  build  up. 

Revenue  from  Liquor  Licenses. 

With  regard  to  another  item  of  revenue,  that  from  liquor  licenses,  your 
committee  seem  to  be  a  little  out  in  their  figures  and  a  little  off  in  their 
morals.  As  to  the  amount  of  revenue,  they  say:  — 

“  In  regard  to  the  income  from  licenses  to  sell  intoxicating  liquors,  the  gratifying 
fact  appears  that  it  has  so  increased  that  while  one  fourth  goes  to  the  State,  yet  the 
remainder  gives  our  city  treasury  a  million  of  dollars.” 

The  statements  of  the  city  auditor’s  report  rai  st  be  accepted  as  conclusive. 
Sect.  14,  Chap.  100,  of  the  Public  Statutes,  requires  that  one  fourth  of  the 
gross  receipts  from  this  source  shall  be  paid  over  to  the  State  Treasurer. 
The  auditor’s  report  shows  that  $154,234.25  was  so  paid.  This  would  give 
$616,937  total  receipts,  with  the  city’s  share,  $462,702.  But  this  share  is 
charged  by  law  with  the  extension  and  maintenance  of  the  police  signal 
system,  and  the  general  expense  of  clerks  and  officers  employed  in  enforcing 
the  license  law. 

The  city  report  gives  these  in  detail,  and  shows  that  the  net  revenue  to 
the  city  last  year  was  $299,964. 

But  the  committee  point  out  how  this  loss  can  be  repaired;  they  say:  — 

“  The  ease  with  which  this  income  has  increased  is  a  plain  indication  of  further 
possibilities  in  the  same  direction.  It  is  suggested  that  special  pains  should  be  taken 
in  this  kind  of  taxation  to  discountenance  public  bars,  which  are  illegal  noiv  ;  and  the 
first-class  hotel,  that  shall  limit  its  sale  to  the  dining-table  and  banish  this  already 
illegal  institution  from  its  premises,  should  be  favorably  considered,  and  the  tax  upon 
those  who  do  not  should  be  much  larger  than  as  at  present.  A  classification  of  this 
sort  seems,  to  your  committee,  wise  and  justy 

Sympathy  for  a  committee  whose  scheme  starts  out  with  an  annual  deficit 
of  $7,500,000,  caused  by  the  loss  of  personal  taxes,  and  who  want  not  only 
to  replace  that  amount,  but  to  find  an  increased  revenue,  compels  me,  while 
I  look  to  their  methods,  to  remember  their  difficulties. 

But  the  proposition  to  charge  ohe  rate  of  license  fees  to  those  who  keep 
within  the  law,  and  another  and  a  higher  rate  to  those  who  break  it,  leads 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


15 


me  to  suggest  that  in  this  line  there  is  a  fruitful  field  for  increase  of  revenue ; 
and  that  a  license  for  liquor  to  be  drunk  on  the  premises,  might,  for  ten  per 
cent  advance,  be  changed  to  one  to  get  drunk  on  the  premises;  and,  at  some 
price,  a  man  might  be  licensed  for  twelve  months  to  commit  assault  and 
battery. 

But  if  the  committee  are  serious  in  their  proposal,  to  use  their  own  lan¬ 
guage  as  applied  to  myself,  I  must 

♦  > 

“  unqualifiedly  condemn  both  the  spirit  and  method  of  treating  the  subject.” 

Assessment  of  Personal  Property  by  the  State. 

The  committee  recommend  that  direct  State  and  county  taxes  be  abolished 
so  far  as  the  assessment  of  real  estate  is  concerned,  and  would  raise  the  tax 
of  the  Commonwealth  and  her  counties  by  the  central  authorities  at  the 
State  House.  This,  they  think,  would  be  possible  under  their  scheme  of 
having  our  real  estate  taxed  only  for  city  purposes.  In  this  connection 
they  say :  — 

“  Recognizing,  however,  the  fact  that  an  increased  rate  upon  real  property,  which 
now  bears  three  fourths  of  the  taxation,  would  be  misunderstood  and  excite  opposi¬ 
tion,  they  recommend  on  the  part  of  the  State  such  taxation  of  personal  property  as 
shall  realize  a  sum  about  equal  to  the  ordinary  State  tax,  and  the  amount  of  the 
county  taxes,  say  from  $3,000,000  to  $5,000,000.” 

The  State  tax  last»  year  was  $2,000,000;  for  each  of  the  two  preceding 
years,  $2,250,000 ;  the  county  taxes  of  1889  amounted  to  $1,823,000.  The 
estimate  of  the  committee  is  a  fair  one  —  call  the  sum  $4,000,000.  Your  com¬ 
mittee  evidently  consider  that  the  strongest  reason  for  giving  up  local  tax¬ 
ation  of  personal  estate  is,  that  a  large  part  of  it  cannot  be  reached,  and  that 
to  the  extent  that  it  is  taxed,  it  is  disproportionately  assessed.  The  annual 
assessment  and  collection  of  $7,500,000  by  the  local  authorities  makes  the 
grievance  that  justifies  their  report  and  conclusions.  They  throw  away  the 
$7,500,000,  and  ask  the  Commonwealth  to  assess  more  than  fifty  per  cent 
of  the  amount  on  personal  property.  Do  they  think,  by  reducing  the 
amount  one  half,  that  the  new  tax  would  be  twice  as  just  or  only  one  half 
as  unjust  as  the  old  one  ?  Do  they  think  that  State  officials,  from  the  dome 
of  the  State  House,  can  discover  personal  property  better  than  can  local 
assessors  from  three  hundred  and  fifty  city  and  town  halls  ?  Or  perhaps 
they  think  that  their  adoption  of  the  suggestion  of  the  Tax  Commission  of 
1875,  ^nd  their  recommendation  for  a  legacy  and  inheritance  tax,  will,  if  put 
in  the  form  of  law,  raise  the  amounts  needed  for  State  and  county  revenue. 
Possibly  that  result  would  follow  if  the  committee  would  guarantee  their 
estimates,  and  are  good  for  their  amount.  The  tax  on  collateral  inher¬ 
itance  exists  in  Pennsylvania  and  New  York.  These  States,  in  area,  popu¬ 
lation,  and  natural  wealth  and  resources,  are  vastly  our  superior.  New  York 


i6 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS 


is  nearly  six  times  larger,  and,  by  the  last  census,  nearly  three  times  more 
populous,  than  Massachusetts.  Your  committee  state  that 


“This  tax  realized  to  the  State  of  Pennsylvania, 
In  1888  over  ...... 

In  New  York  in  1887  .... 

In  New  York  in  1888  .... 

Estimated  in  1889  ..... 


^700,000 
55L716 
736,000 
1,000,000  ” 


The  estimate  of  the  official  was  a  good  one.  The  figures  are  just  out ; 
the  five-per-cent  tax  realized  $1,076,000.  Your  committee’s  observation  and 
•estimate  are,  that 

“As  there  are  few  States  in  the  Union  whose  inhabitants  lead  the  people  of  Mas¬ 
sachusetts  in  the  accumulation  and  distribution  of  property,  this  tax  should  realize  to 
the  State  treasury  not  less  than  $1,500,000  at  the  outset.” 

New  York,  two  years  ago,  was  receiving  only  about  one  third  of  what  the 
committee  expect  to  get  at  the  outset. 

A  law  taxing  collateral  inheritance  ought  not  to  be  difficult  of  enactment. 
But  while  love  for  wife  and  children  remains  an  animating  sentiment  of  the 
human  race,  it  will  be  impossible  to  pass  a  succession  tax  law  that  will  at¬ 
tempt  to  produce  a  large  revenue,  or,  if  passed,  to  enforce  it  with  uniformity. 
Such  a  tax,  if  considered  burdensome,  would  be  defeated  \y^  ante  mortem 
gifts.  Yet  your  committee,  in  their  estimates,  after  putting  the  collateral 
tax  at  $1,500,000,  put  the  annual  income  of  their  proposed  succession  tax 
at  no  less  amount  than  $2,500,000,  for  they  say :  — 

“  Your  committee  have  no  doubt  that  these  two  State  taxes  will  annually  at  least 
equal  the  $4,000,000  of  State  and  county  tax.” 

Before  looking  to  neighboring  States  with  such  unfortunate  results,  your 
committee  should  have  remembered  that  Massachusetts  has  had  experience 
in  this  class  of  assessments,  and  that  it  is  not  twenty  years  since  the  United 
States  discontinued  its  legacy  and  inheritance  tax. 

In  1871,  the  last  year  of  its  operation,  personal  estate,  assessed  at  three 
fourths  of  one  per  cent  to  parent  or  child,  brother  or  sister,  and  with  increas¬ 
ing  rates  up  to  six  per  cent  to  a  stranger  in  blood,  produced  $292,131 ;  and 
real  estate,  assessed  to  the  immediate  family  at  one  per  cent,  to  brothers 
and  sisters  at  two,  to  collaterals  at  four  and  five,  and  to  strangers  at  six  per 
cent,  produced  $71,378;  a  total  of  $363,509.  Both  taxes  united,  from  1863 
to  1871,  produced  less  than  one  half  of  the  amount  your  committee  “have 
no  doubt  ”  will  annually  be  forthcoming  if  their  recommendation  is  adopted, 
the  exact  figures  for  nine  years  being  $1,934,392. 

The  void  the  committee  made,  they  have  not  filled.  What  class  of  per¬ 
sonal  property  will  the  committee  recommend  the  State  to  tax  to  provide  for 
the  deficiency  ?  And  how  will  they  prevent  still  greater  injustice  than  they 
claim  now  exists  ? 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


7 


The  Valuation  of  Personal  Property  in  Boston. 

Before  I  review  their  concluding  remarks,  I  have  a  few  words  to  say  as  to 
another  class  of  their  estimates.  Your  committee  have  assumed  all  through 
their  argument  that  the  assessable  personal  valuation  of  Boston  was  the 
$201,606,300  borne  on  the  assessors’  rolls  at  City  Hall.  They  make  no  men¬ 
tion  of  $54,836,500,  the  investments  of  our  Boston  residents  in  Massachu¬ 
setts  corporations,  or  of  $1,493,100,  the  shares  of  national  banks  in  the  State, 
but  out  of  Boston  held  by  our  citizens,  although  these  figures,  with  the  ex¬ 
planation  of  their  meaning,  are  contained  in  the  assessors’  statement,  printed 
as  an  appendix  to  the  auditor’s  report. 

The  committee  were  not  unaware  of  this  class  of  statistics.  From  the 
report  of  April  last,  containing  the  figures  of  May  i,  1888,  they  took  the 
number  and  value  of  the  vacant  houses  of  the  city,  while  discussing  the 
effect  of  the  single  tax.  It  does  not  trouble  me  that  they  gave  the  credit  of 
the  compilation  to  the  auditor,  but  it  does  that  they  should  drop  out  of 
sight  twenty-two  per  cent  of  Boston’s  assessed  personal.  I  can  not  explain 
these  classes  of  property  more  concisely  than  to  say,  that  the  State  taxes 
the  corporations,  or  receives  their  assessment,  and  pays  over  to  the  city  the 
tax  on  the  shares  of  its  residents.  I  will  add,  however,  an  extract  from  the 
report,  which  I  shall  not  say  I  quote,  for  the  language  is  my  own ;  — 

“  As  the  revenue  from  these  two  sources  is  always  estimated  before  the 
amount  to  be  raised  by  taxation  is  determined,  the  effect  of  the  valuation  of 
this  property  in  reducing  the  rate  of  taxation  upon  the  $764,452,548  assessed 
by  the  city  is,  as  nearly  as  may  be,  the  same  as  though  its  amount  was  in¬ 
cluded  in  the  assessors’  aggregate,  and  the  taxes  were  assessed  by  them. 

“The  total  valuation  of  personal  estate  which  is  assessed  for  all  purposes 
for  which  the  city  must  raise  money  by  taxation  can,  for  the  year  i888,  he 
put  at  $257,768,873.” 

Possibly  the  committee  left  this  trifle  of  $56,000,000  out  of  their  computa¬ 
tion,  because,  while  they  intend  that  all  other  personal  property  shall  go  free, 
their  scheme  proposes  that  these  classes  shall  be  held  for  full  taxation.  I' 
cannot  help  again  quoting  their  own  words  :  — 

“  Now,  when  you  think  of  the  burden  of  taxation  as  being  laid,  so  far  as  personal 
property  is  concerned,  on,  it  may  be  one  fifth  or  one  tenth  part  of  that  property,  it 
is  immaterial  which,  does  not  the  injustice  of  this  thing  loom  up  so  that  it  over¬ 
shadows  all  others?  ” 

The  taxes  for  present  year  (May  i,  1889)  are  not  yet  fully  collected  and 
paid  over  to  the  city  ;  but  the  indications  point  to  a  larger  return  than  that 
of  last  year.  As  you  further  consider  your  committee’s  report,  keep 
Boston’s  assessed  valuation  in  mind  as  $260,000,000. 


i8 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


The  Effect  of  the  Exemption  of  Personal  Property  on  Real 

.Estate. 

But  retaining  the  revenue  from  personal  property  in  Massachusetts  banks 
and  corporations,  so  that  under  their  sche7ne  if  a  7nan  held  shares  in  a  for- 
eig7t  co7npany  he  would  be  exe7npt,  but  if  he  held  in  a  ho77ie  corporation  he 
W02ild  be  taxed^  your  committee  promise,  if  their  plan  is  adopted,  with  a 
million  dollars  added  to  the  tax  levy,  the  bills  can  be  settled  at  City  Hall, 
with  only  three  dollars  added  to  the  rate,  the  tax  to  be  based  on  real  estate 
alone.  Your  committee  admitted  in  an  early  part  of  their  report  that  they 
had  a  difficult  problem.  They  said  that 

“  The  task  given  your  committee,  so  far  as  Boston  is  concerned,  is  doubly  arduous 
because  of  the  immediate  twofold  requirement. 

“The  problem  here,  then,  is  not  simply  to  release  all  personal  property  and  keep  the 
tax  rate  about  where  it  is,  but  to  add  a  million  or  more  to  our  income,  as  well  as 
release  all  personal  property,  and  keep  the  rate  where  it  is.” 

The  committee  think  they  have  successfully  accomplished  their  task. 
By  such  estimates  as  have  been  considered  they  have  disposed  of  the  State 
and  county  taxes  ;  have  retained  the  city’s  income  from  corporate  invest¬ 
ments  and  licenses,  and  find  that  a  rate  of  $i6  per  $1,000  on  $600,000,000 
real  estate  will  produce  $9,600,000,  which,  added  to  the  income  just  indicated 
and  from  other  sources,  would  make  a  total  of  $12,400,000,  and  give  the 
$12,000,000  the  city  needs.  From  their  stand-point  this  computation  seems 
correct.  But  I  am  confident  when  the  full  effect  of  your  committee’s  scheme 
shall  be  felt,  you  would  not  have  $600,000,000  of  real  estate  to  assess.  The 
right  of  the  government  to  tax  is  a  mortgage  on  your  property  to-day. 
What  we  call  a  first  is  in  reality  a  fifth  mortgage.  The  debt  of  the  nation, 
the  State,  the  county,  and  the  city  are  all  below  the  mortgage,  and  public 
securities  are  a  choice  class  of  credit  property  because  of  the  paramount 
right  of  government  to  tax  for  principal  and  interest,  with  a  lien  on  the 
estate.  The  greater  the  mortgage,  the  less  the  value  of  the  equity.  Your 
committee  put  the  proportions  of  assessed  real  and  personal  at  seventy-five 
per  cent  real,  twenty-five  per  cent  personal.  When  the  taxes  assessed  at  the 
State  House,  in  respect  of  personal  property,  are  added  to  those  of  the  local 
assessors,  their  true  proportions  are  shown  to  be  fifty-eight  and  forty-two  per 
cent,  respectively.  By  the  increase  of  the  tax  rate  from  nine  to  twelve  dol¬ 
lars  for  city  purposes,  an  advance  of  thirty-three  per  cent,  and  to  a  greater 
per  cent  if  the  city  must  still  carry  a  part  of  the  State  and  county  taxes,  your 
committee  propose  to  add  to  the  present  direct  tax  on  real  estate  from  a 
third  to  a  half,  and  expect  that  it  will  retain  its  present  value.  The  effect  of 
exemption  on  the  property  remaining  to  be  taxed  can  perhaps  be  better  under¬ 
stood  by  an  illustration.  Start  from  our  city  boundary  and  draw  a  line  run- 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


19 


ning  east  and  west,  through  Beacon,  School,  Washington,  and  Milk  streets 
to  the  water,  and  by  our  nnain  ship-channel  to  the  outer  harbor.  North  of 
that  line  a  fairly  close  computation  found  $185,200,000  real  estate;  call  it 
$200,000,000,  and  say  that  south  of  the  line  there  is  $400,000,000.  Pass  a  law 
that  will  exempt  that  $200,000,000  from  taxation,  and  lay  the  whole  burden  on 
the  $400,000,000.  Does  any  one  suppose  that  when  it  was  sure  that  the  con¬ 
ditions  would  continue,  that  one  third  of  the  value  of  the  city  would  be  found 
on  one  side  of  the  line  and  two  thirds  on  the  other  ?  Such  effect  will  be  pro¬ 
duced  on  real  estate  by  the  exemption  of  personal  property.  Mr.  Gleason, 
our  late  State  Treasurer,  stated  that  he  thought  such  taxation  would  diminish 
the  value  of  the  real  estate  one  third.  The  gentleman  who  will  speak  after 
me  has  worked  out  the  problem  more  definitely.  In  a  recent  speech  before 
a  legislative  committee,  he  puts  the  confiscation  that  would  be  worked  by  the 
Henry  George  scheme  at  $550,000,000,  and  a  tax  on  real  estate  alone  (land 
and  buildings)  at  $110,000,000,  this  last  tax  increasing  the  average  rate  of 
Massachusetts  from  $15.06  to  $27.29. 

What  the  shrinkage  would  be  must  remain  a  matter  of  opinion.  But 
assume  it  to  be  one  third,  and  the  basis  of  the  tax  would  drop  to  $400,000,000, 
and  to  raise  $10,000,000  would  require  a  rate  of  $25  ;  or  if  we  discard  all 
income  from  personal  sources  and  raise  the  $12,000,000  the  committee 
want,  we  must  have  a  rate  of  three  per  cent,  or  $30  per  $1,000. 

The  Effect  of  the  Plan  of  the  Committee. 

Now,  try  the  committee’s  plan.  The  three -thousand-dollar  house  at  the 
present  rate  of  thirteen  per  thousand  bears  a  tax  of  $39.  On  their  scheme, 
$3,000  valuation,  less  $1,000  exemption  ;  net,  $2,000.  Tax  at  twenty  five  per 
thousand,  $50,  or  on  full  valuation,  $75. 

The  fifty-thousand-dollar  warehouse  at  thirteen  carries  a  tax  of  $650. 
But  on  the  committee’s  plan,  raised  ten  per  cent  to  $55,000,  its  tax  at  twenty- 
five  is  $1,375.  With  taxes  on  real  and  personal  at  thirteen  per  thousand,  the 
warehouse  could  cover  $50,000  of  merchandise,  and  pay  $75  less  tax  than 
by  the  plan  of  the  committee. 

The  Mortgage  Question. 

And  now  a  few  more  words  on  the  closing  statements  of  the  report,  and  I 
have  done.  I  never  expect  to  agree  with  the  honorable  chairman  of  your 
committee  on  a  question  of  taxation,  but  I  certainly  never  expected  to  dis¬ 
agree  with  him  on  a  question  of  fact.  But  when  he  says  that  in  the  struggle 
which  resulted  in  the  exemption  of  money  secured  by  mortgage,  the  chairman 
of  the  Boston  assessors  and  “  certain  parties  ”  who  were  lenders  of  money 
upon  mortgage  security  were  on  one  side  asking  for  taxation,  an^i  on  the 
other  side  “only  the  people,”  I  must  disagree  with  his  statement.  On  the 
occasions  to  which  he  refers,  called  before  legislative  committees  by  vote  of 
those  bodies,  I  represented  only  my  own  opinions.  But  I  believed  then  and 


20 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


I  believe  now,  that  I  was  on  the  side  of,  and  not  against,  the  people.  The 
credit  of  the  exemption  of  secured  debts  (while  unsecured  debts  are  still 
taxed),  in  my  opinion,  belongs  more  than  to  any  other  man  to  the  Hon.  A. 
W.  Beard,  the  friertd  and  neighbor  of  your  chairman  of  committee  ;  and  it 
was  that  gentleman  who  received  the  aid  and  assistance  of  the  lenders  of 
mortgage  money.  They  saw,  as  clearly  as  did  the  chairman  of  the  Boston 
assessors,  that  the  enactment  in  the  form  in  which  it  was  passed  was  power¬ 
less  to  help  the  borrowers,  and  taxed  all  other  classes  for  the  benefit  of  the 
lenders  of  capital.  I  am  surprised  that  the  committee  should  be  so  mistaken 
as  to  put  three  leading  Boston  trustees,  holders  then  and  now  of  large 
amounts  of  mortgages,  as  allies  of  mine  in  that  contest,  when,  in  fact,  they 
were  my  ablest  opponents. 

But  as  to  the  results  of  this  law  it  is  not  surprising  that  I  should  disagree 
with  the  committee  ;  they  say  that 

“The  rate  of  interest  upon  mortgages  has  fallen  to  so  reasonable  a  figure  that 
nobody  complains;  even  the  well-to-do  business  man  can  hardly  afford  not  to  have 
a  mortgage  upon  his  home.” 

We  all  admit  that  the  rate  of  interest  on  mortgages  has  fallen  since  the 
enactment  of  the  law  of  i88i.  Two  years  before  that  law  went  into  effect 
the  average  rate  of  interest  upon  the  mortgages  of  all  parts  of  the  State 
was  per  cent.  After  seven  years’  operation  the  records  show  that  the 
mortgages  recorded  in  the  first  five  months  of  1889  were  at  an  average  rate 
of  ^  difference  of  per  cent.  With  the  average  tax  of  the 

State,  as  determined  by  its  tax  commissioner,  at  per  cent,  clearly  the 
borrower  has  not  received  the  whole  advantage  of  the  exemption,  unless  the 
rates  of  interest  have  been  advancing  during  the  last  decade.  That  can 
hardly  be,  when  within  a  week  Boston  has  sold  its  3^  per  cents,  liable  to 
taxation,  at  a  premium.  We  all  know  that  interest  has  receded  largely 
during  the  last  eight  years.  All  the  concession  that  lenders  of  money  upon 
mortgages  have  made  to  their  borrowers  they  have  been  compelled  to  make 
by  the  laws  of  trade,  not  by  those  of  the  State.  I  am  satisfied  that  were  the 
laws  that  sustain  the  present  exemption  of  mortgages  repealed  by  the  present 
Legislature,  as  mortgages  fell  in,  the  lenders  would  take  the  rate  fixed  by 
the  money  markets  of  the  world,  and  pay  their  own  taxes  ;  and  if  they  refused 
to  do  so,  foreign  capital  would  give  borrowers  all  they  required  at  that  rate. 

Not  alone  as  a  tax-gatherer  have  I  had  opportunities  to  study  this  problem. 
One  of  the  ways  in  which  I  work  for  the  public  is  as  the  unsalaried  presi¬ 
dent  of  a  savings  bank  with  some  two  and  a  quarter  millions  of  assets,  nearly 
one  half  of  which  is  in  mortgages.  I  have  held  the  position  six  years.  As 
a  member  of  its  Board  of  Investment  I  have  known  of  every  transaction  that 
has  taken  place  in  that  time,  and  not  a  dollar  has  been  loaned  upon  mortgage 
at  less  than  five  per  cent.  As  second  on  your  committee,  I  recognize  the 
name  of  my  friend,  the  chairman  of  the  Commission  of  Public  Institutions, 
who,  like  myself,  is  the  president  of  a  Boston  savings  bank.  When  he 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


21 


places  his  mortgages  at  five  per  cent,  or  better;  gets  the  remission  of  the  one 
half  per  cent  tax  at  the  State  House  on  the  amount  he  has  invested,  and 
then  buys  the  high-grade  securities,  in  which  alone  savings  bank  funds  can 
be  placed,  at  such  a  rate  of  premium  that  the  interest  is  reduced  to  three  and 
one  half  per  cent ;  finds  that  the  one  half  per  cent  tax  reduces  the  income  to 
a  net  three  per  cent,  he  needs  no  one  to  tell  him  which  is  the  better  invest¬ 
ment,  or  which  can  better  bear  the  tax.  But  he  must  not  ask  of  us  such 
blind  confidence  that  we  accept,  even  from  him,  a  statement  that  implies 
that  the  imaginary  lines  that  separate  Massachusetts  from  her  sister  States 
are  barriers  that  control  the  price  of  money.  Your  committee  say  :  — 

“  Massachusetts  mortgages  have  become  the  best  possible  investment  for  trust 
funds,  and  the  scanty  income  of  the  widow  and  orphan  from  this  source  is  not 
required  to  be  divided  with  the  town  or  city  in  taxes.” 

The  widow  and  orphan  are  protected  now  by  Massachusetts  law  from 
oppressive  assessments,  whatever  the  class  of  property  held  by  them.  The 
assessors  of  Boston  annually  remit  a  large  amount  of  taxes  upon  real  estate, 
which  shelters  the  children  of  poverty.  But  from  the  statement  of  the 
committee  strike  out  “scanty”  and  insert  a7itple^  strike  out  “widow  and 
orphan  ”  and  insert  and  I  will  admit  that  it  correctly  describes 

the  effect  of  the  present  law.  And,  lastly,  say  the  committee  :  — 

“After  the  readjustment  to  the  new  order  of  things  had  taken  place,  there  was  no 
perceptible  increase  in  the  rate  of  taxation;  and  this  reform,  which  puts  millions  into 
the  pockets  of  the  people  in  the  reduced  rates  of  interest  upon  mortgages  and 
increased  value  of  real  estate,  to  all  appearances  costs  the  general  tax-payer  nothing.” 

No  perceptible  increase  in  taxation?  In  i88r,  the  last  year  that  mort¬ 
gages  were  taxed,  the  rate  in  Boston  was  $13.90.  In  1882,  upon  their  ex¬ 
emption,  the  rate  went  with  a  bound  to  $15.10,  notwithstanding  a  $12,000,000 
gain  in  real-estate  valuation.  In  1883  the  rate  was  $14.50,  to  be  succeeded 
in  1884  by  the  highest  rate  our  city  'has  ever  known,  $17.00  per  $r,ooo. 
Since  that  date  the  rate  has  been  comparatively  moderate.  But  no  one  can 
trace  any  connection  between  the  reduced  rates  and  the  mortgage  law.  The 
reason  for  the  reduction  is  manifest. 

The  law  of  1885,  limiting  the  rate  of  taxation,  produced  it,  and  has  left 
such  a  void  in  the  city  treasury  that  your  committee  are  hunting  for  an  extra 
million  to  help  fill  it.  Your  committee  use  cautious  words  at  the  close  of 
this  statement,  “to  all  appearances  costs  the  general  tax-payer  nothing.”  It 
costs  him  the  shortage  in  the  treasury,  which  must  be  met  by  increased 
taxes  or  his  share  of  the  discomfort  of  neglected  streets.  An  illustration 
will  perhaps  make  this  clear.  Our  wards  13,  14,  and  15  have  a  valuation  of 
$35,000,000,  —  just  about  the  amount  of  mortgages  that  could  be  taxed,  if  the 
law  was  now  as  it  existed  down  to  1881. 

I  do  not  mean  to  say  that  there  are  only  that  amount  of  mortgages,  out- 


22 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


side  savings  banks  and  corporations,  held  in  Boston  to-day.  When  the  law 
taxed  them,  it  treated  them  as  credits,  to  be  offset,  before  they  could  be 
taxed,  by  the  debts  of  their  holders,  just  as  your  ledger  credits  are  dimin¬ 
ished  before  assessment  by  your  liabilities.  But  the  taxable  mortgages 
under  the  old  law  and  the  valuation  of  South  Boston  are  about  the  same. 
Exempt  the  district  from  taxation,  give  the  residents  police,  tire  department, 
schools,  in  short,  all  the  costs  of  government  without  cost  to  them,  at  the 
expense  of  the  rest  of  the  city.  The  rate  of  taxation  would  rise.  But  that 
might  be  met  by  an  enactment  reducing  our  tax  limit  from  nine  to  eight  dol¬ 
lars  for  city  purposes.  Your  committee  would  only  have  to  recommend  that 
instead  of  a  million  more  than  we  are  now  raising,  that  a  million  and  a  half 
be  found,  and  they  could  again  report  that  “  to  all  appearances,”  the  new 
exemption  “  costs  the  general  tax-payer  nothing.”  • 

But  before  leaving  this  branch  of  the  report,  let  me  call  attention  to  one 
more  statement  of  the  committee.  They  say  ;  — 

“  Having  in  this  reform  flung  out  of  the  tax  levy  of  the  Commonwealth  from  one 
to  two  hundred  millions  of  Massachusetts  mortgages,  what  is  there  at  all  alarming  in 
the  bolder  step  of  doing  the  same  thing  with  five  hundred  millions  more  of  personal 
property,  the  inevitable  result  of  which  cannot  fail  to  be  a  correspondingly  greater 
boon  to  every  interest  in  the  State?  ” 

The  highest  amount  of  mortgages  assessed  under  the  old  law  was  $62,- 
510,000.  At  the  present  time,  had  the  law  been  continued,  the  amount 
would  have  been  about  $80,000,000.  The  official  figures,  a  year  old,  as  to 
personal  property  locally  assessed,  were,  in  round  numbers,  $532,000,000. 
A  statement  so  immensely  broadened  at  one  end  and  clipped  at  the  other 
can  hardly  be  called  accurate. 

Effect  of  Taxes  on  Real  Estate  alone  further  considered. 

My  review  of  the  report  of  your  committee  has  taken  more  of  your  even¬ 
ing  than  can  fairly  be  given  to  one  person. 

I  have  no  time  to  say  a  word  in  defence  of  the  Massachusetts  system  of 
taxation,  or  to  trace  to  any  considerable  extent  the  incidence  of  the  system 
your  committee  would  recommend.  But  a  tax  on  real  estate  alone  is  a  tax 
on  consumption.  It  will  tax  a  man  in  proportion  to  the  number  of  persons 
in  his  family,  and  without  other  reference  to  his  ability  to  pay  assessments 
than  the  value  of  the  estate  he  occupies.  It  will  largely  exempt  the  rich  ;  and 
directly  upon  the  owners  of  small  estates,  and  indirectly  through  increased 
rents,  will  terribly  tax  the  poor.  Let  me  illustrate  again,  and  as  tax  records 
are  public  property,  1  shall  not  hesitate  to  use  my  own.  Leaving  out  of 
the  account  my  vacant  land  (for  poor  people  cannot  carry  that  class  of  prop¬ 
erty),  I  was  taxed  last  year  on  twelve  small  estates  in  Ward  14.  I  live  in 
one,  and  let  the  others  to  fourteen  families.  My  tax  on  this  property  was 
$525.03.  At  $25  per  $1,000,  which  I  think  fairly  represents  the  rate  under 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


23 


the  committee’s  scheme,  it  would  be  $1,017.50,  I  do  not  in  this  illustration 
make  any  allowance  for  the  shrinkage  of  real  estate,  for  the  committee’s 
plan  would  not  effect  much  reduction  of  values  of  cheap  land.  There  is  not 
much  value  to  shrink.  The  buildings  would  not  recede  in  value,  for  if  such 
property  will  not  pay  as  fair  a  return  to  capital  as  untaxed  personal  estate, 
it  will  not  be  built.  The  higher  the  cost  of  the  land,  the  greater  the  loss 
to  the  owner.  Taking  the  $25  instead  of  the  $30  rate  is,  I  think,  allowance 
enough  to  make  the  illustration  a  fair  one.  But  if  I  can  take  advantage  of 
the  unconstitutional  beneficence  of  the  committee,  and  deduct  $1,000  from 
the  value  of  my  estates,  worth  $3,000  or  under,  the  tax  will  be  $150  less,  or 
$867.50,  an  advance  of  ninety-three  per  cent  on  the  first,  or  sixty-five  per 
cent  on  the  second  statement  of  the  case.  Who  pays  this  increase?  The 
committee  think  it  so  clear  that  the 

“addition  to  the  burden  of  taxation  upon  real  estate  will  not  in  the  end  come  out  of 
the  real-estate  owner  ” 

that  they  will  not  repeat  the  familiar  argument.  I  cannot  agree  with  them 
that  it  is  so  clear.  I  think  the  addition  would  come  out  of  me  to  the  extent 
of  the  land  value,  and  out  of  my  tenants  for  the  value  of  the  buildings. 
Fortunately  for  me,  land  is  cheap  in  that  location.  Including  the  value  of 
the  house  in  which  I  live,  my  share  of  the  added  burden  would  be  thirty- 
eight  per  cent,  and  my  tenants,  nearly  all  of  the  wage-earning  class,  must 
carry  over  three  hundred  dollars,  sixty-two  per  cent,  of  the  tdx  added  to 
their  homes.  Every  time  they  visit  the  corner  grocery,  or  buy  elsewhere 
the  clothing  or  subsistence  of  their  family,  in  the  price  of  goods  increased 
by  increased  rentals,  they  must  be  further  taxed.  Still  worse  will  be  their 
condition  if  the  committee  are  right,  and  under  their  proposed  law  I  have 
the  power  to  put  the  whole  increase  upon  them.  In  either  case  they 
must  come  down  in  their  scale  of  living.  The  tenant  will  save  less  of  his 
earnings,  the  owner  will  have  less  of  income,  but  both  together,  with  the  help 
of  business  taxed  through  added  rents,  can  relieve  the  capitalist  from  per¬ 
sonal  assessments,  and  so  help  to  create  other  “centres  of  wealth,  beauty, 
and  an  attractive  and  money-spending  people,”  beside  those  now  existing. 
That  the  ability  to  do  this  exists  there  can  be  no  doubt.  The  wages  of  the 
manual  labor  class  in  England  exceed  the  united  income  of  the  middle  class 
and  the  aristocracy.  Your  committee  clearly  intend  that  that  class  shall 
continue  to  contribute,  when  the  millidnnaire  is  released  from  all  direct  tax 
on  his  personal  property.  Nowhere  is  there  a  suggestion  to  give  up  the  tax 
upon  savings-bank  deposits,  which  last  year  yielded  to  the  State  a  revenue 
of  $900,000. 

The  tax  reformers  who  are  ever  planning  that  some  class  other  than 
their  own  shall  carry  the  burden  of  taxation,  may  well  halt  where  they  are. 
We  live  in  times  that  are  not  favorable  to  transplanting  to  American  soil 
the  tax  methods  and  class  distinctions  of  the  governments  of  Europe. 


24 


ADDRESS  ON  TAXATION,  BY  MR.  THOMAS  HILLS. 


Questions  of  labor,  capital,  and  taxation  are  year  by  year  taking  more  and 
more  a  hold  on  the  masses  of  the  people. 

The  path  your  committee  have  marked  out  will  be  a  difficult  one  to  follow, 
and  were  it  not  for  the  fact  that  our  form  of  government  provides  a  peaceful 
way  for  the  determination  of  such  problems,  it  would  be  a  dangerous  one  to 
tread. 

We  must  remember  that  a  majority  of  our  voters  pay  only  a  poll  tax,  and 
that  a  vast  majority  of  our  people  either  pay  no  property  tax  or  one  that 
would  be  affected  unfavorably  by  such  changes  as  those  recommended  by 
your  committee.  It  cannot  be  that  those  best  able  to  bear  assessments 
will  be  able  to  transfer  their  tax  burdens  permanently  to  those  who  hold  the 
political  power  of  the  State.  It  is  much  more  reasonable  to  suppose  that 
the  system  of  taxation  which  has  existed  substantially  unchanged  in  our 
prosperous  Commonwealth  for  nearly  three  centuries  will  still  require  all 
citizens,  each  as  nearly  as  may  be  according  to  his  ability,  to  contribute  to 
the  support  of  the  government  that  protects  all  within  its  borders,  and 
should  know  no  favored  class. 


STANDING  COMMITTEES. 


TRANSPORTATION. 

Hon.  ALDEN  SPEARE . Of  the  Oil  Trade  Association, 

Mr.  WM.  O.  BLANEY . Of  the  Chamber  of  Commerce, 

Mr.  WM.B.RICE  .  .  .  .  .  Of  the  Shoe  and  Leather  Association. 

Mr.  J.  M.  W.  hall  .  .  Of  the  Bay  State  Lumber  Trade  Association. 

Mr.  P.  frank  HENNIGAN  .  .  Of  the  Fruit  and  Produce  Exchange. 

MAIL  SERVICE. 

Mr.  JOHN  D.  MORTON . Of  the  Paint  and  Oil  Club. 

Mr.  JOSEPH  BURNETT . Of  the  Druggists  Association. 

Mr.  OSCAR  H.  SAMPSON  ....  Of  the  Merchants  Association, 
Mr.  GEORGE  O.  CARPENTER  .  Of  the  Underwriters  Association. 
Mr.  JOHN  L.  BATCHELDER . Of  the  Coal  Exchange. 

CUSTOMS. 

Mr.  CHARLES  I.  THAYER . Of  the  Drysalters  Club. 

Mr.  GEORGE  W.  HERRICK . Of  the  Metal  Association, 

Mr.  clarence  B.  MITCHELL . Of  the  Fish  Bureau. 


^xeeutiue  Business  /Issoeiatioi) 


LIST  OF  flSSOCIffTIONS  REPRESENTED 


BAY  STATE  LUMBER  TRADE  ASSOCIATION. 

BOSTON  BOARD  OF  FIRE  UNDERWRITERS. 

BOSTON  CHAMBER  OF  COMMERCE. 


BOSTON  DRUGGISTS  ASSOCIATION. 

BOSTON  EARTHEN-WARE  ASSOCIATION. 
i  BOSTON  FISH  BUREAU. 


BOSTON  FRUIT  AND  PRODUCE  EXCHANGE. 

BOSTON  GROCERS  ASSOCIATION. 

BOSTON  MERCHANTS  ASSOCIATION. 

BOSTON  PAPER  TRADE  ASSOCIATION. 


BOSTON 

COAL  EXCHANGE  OF  BOSTON  AND  VICINITY. 

DRYSALTERS  CLUB  OF  NEW  ENGLAND. 


NEW  ENGLAND  SHOE  AND  LEATHER  ASSOCIATION. 
NEW  ENGLAND  FURNITURE  EXCHANGE. 

NEW  ENGLAND  METAL  ASSOCIATION. 


OIL  TRADE  ASSOCIATION  OF  BOSTON. 

PAINT  AND  OIL  CLUB  OF  NEW  ENGLAND. 

THE  MASTER  BUILDERS  ASSOCIATION. 


